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Third quarter data shows overall increase in recalls, amplifying supply chain pressures as regulations tighten

Sedgwick brand protection releases latest U.S. recall index report

MEMPHIS, Tenn., November 19, 2021Sedgwick, a leading global provider of technology-enabled risk, benefits and integrated business solutions, published its latest U.S. product recall index report. According to the report findings, the combination of operational challenges and increasingly aggressive safety regulators is leading to increased recalls and enforcement actions across industries.

The report reveals the latest recall data, trends, risks and predictions businesses need to know as they prepare to navigate assertive regulators emboldened by a Democratic majority in the U.S. government and an increasingly collaborative regulatory environment abroad.

This industry-leading research and analysis was designed and delivered by Sedgwick’s experts in best practice product recall and remediation solutions. Sedgwick works in partnership with clients across all industries to manage the risks and minimize the impacts of in-market business and product crises.

Highlights include third quarter data and predictions for what to expect in the remainder of 2021 and into 2022:

Third quarter recall data:

  • Automotive recall activity increased to a seven-quarter high at 207 events, representing a 21.1% increase over 171 recalls in the second quarter of 2021.
  • The consumer product industry saw 60 recalls in the third quarter of 2021, maintaining a volume consistent with quarterly averages observed in 2019 and 2020.
  • Food recalls dropped 11.3% to 94 events in the third quarter. These recalls impacted just 2.4 million units, representing a 69.7% decrease quarter-over-quarter.
  • After falling for four straight quarters, medical device recalls jumped from 173 events to 235 events quarter-over-quarter, representing a 35.8% increase.
  • Pharmaceutical recalls jumped 45.8% in the third quarter after a three-quarter slide. These 86 recalls impacted 38.1 million units, representing a 65.8% decrease quarter-over-quarter.

Looking ahead in 2022:

  • For the automotive industry, with an increase in traffic deaths this year and automation features in electric vehicles in high demand, the stage is set for stricter regulatory oversight and increased enforcement. This is reinforced by new administrative leadership at the National Highway Traffic Safety Administration (NHTSA) whose consumer-oriented goals will back a stronger regulatory position. While in many ways NHTSA will be playing catch up, in other areas, the agency has authority that has not yet been exercised. In addition, even with increasing innovation and new regulations, risks associated with long-standing safety issues are still very real.
  • The consumer product industry should expect the appointment of Alexander Hoehn-Saric to Chair of the Consumer Product Safety Commission to result in increased scrutiny, new rulemaking and more frequent enforcement related to matters like e-commerce, imports, infant products, magnets and button batteries.
  • The FDA’s New Era of Smarter Food Safety Blueprint remains a driving force for the industry. But as food and beverage manufacturers face continued workforce challenges, the fourth pillar of the Blueprint – Food Safety Culture – will become even more critical. Companies should be prepared to embrace new technologies and evolve with new regulatory guidance as the industry innovates.
  • Recalls are a hot topic for the medical device industry as the FDA places a renewed emphasis on effective recall management. Manufacturers would be wise to closely monitor the recommendations that come from recent and future meetings, while also finding ways to enhance their own internal processes, thereby limiting regulatory scrutiny, enforcement actions, legal liability and reputational damage.
  • Pharmaceutical companies should be ready to respond to questions about what the company is doing to ensure the safety of its products. At the same time, action should be taken to mitigate the reputational and litigation risks that will arise if and when a company recalls a product months after an inspection that identified violations of any type.

“We are living through a virtual avalanche of business risks – from labor shortages, supply chain issues and inflation to increased regulatory oversight and enforcement,” notes Chris Harvey, senior vice president at Sedgwick. “When combined, these challenges collectively threaten a company’s reputation, and even its financial viability. Companies across all industries should closely re-evaluate all manufacturing processes, vet supply chain partners and invest time and resources to prepare for the next product crisis.”

The recall index is produced by Sedgwick’s brand protection experts every quarter. It is the only report that aggregates, and tracks recall data to help industry stakeholders navigate the regulatory environment, product recalls and other in-market product challenges. For more information, please visit www.sedgwick.com/brandprotection.

To download the latest edition, visit U.S. product recall index report.

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